Ok, the problem is fixed. here is what I did:
1. Disconnected all the cabling throughout the system - not the speaker wires, but all the connections between the various components and the receiver.
2. Reconnected the Roku to an independent hdmi port - #5 or #6, then used it input to port #1.
3. Set the roku to 720p resolution. [My DLP has a top resolution of 1080i], and the audio to 5.1.
4. Ran a test on VuDu - Sucess!!
5. Reset the roku to 1080p
6. Ran test again - Sucess again!!
7. Tried it on Hulu plus - Sucess again!!
The only hiccup I have is the colors on the screen when I switch to the roku device. I have to briefly turn off the receiver and back on to restore the correct colors on the screen. I'm assuming a firmware update will fix that.
So the the whole system is working perfectly using two channel audio with DTS on stereo source only movies, and wonderful Dolby digital plus decoded to DD 5.1 on movies having Dolby digital 5.1 encoded in them.
I'm finally a happy camper!!!